The primary difference between a non-compete and a non-disclosure agreement is what business activities they are intended to restrict.
- A non-compete agreement prohibits one party from doing business that competes with the other party. For instance, it prevents one party from hiring the other’s employees and business contacts, and also from working with competing companies.
- A non-disclosure agreement prevents one or both parties from using or leaking sensitive information learned in negotiations or business relationships.
The reason these documents get confused is because non-disclosure agreements often include a non-compete clause. Businesses bundle the non-compete clause into the non-disclosure agreement because it’s easier to sign one document instead of two.
